Non Paywalled: https://archive.is/RRK1N
Annualised US GDP grew in the second quarter of this year, following a first-quarter contraction, meaning the country avoided a recession by the basic definition. The same appears true according to the NBER’s broader standard.
However it is defined, in this edition, I outline why the recession label isn’t particularly meaningful — especially when applied to the world’s largest economy.
All six indicators were either in or close to contraction in May on a month-on-month basis. In recent months, all have remained weak, but not perhaps bad enough to clear the NBER’s criteria.
Using a real-time recession detection algorithm trained on a century of broader labour market data, Michaillat — who is also a research associate at the NBER — estimates a 71 per cent probability that the US economy was already in recession in May.
In a system as vast, complex and uneven as the US economy, a binary judgment obscures more than it reveals.